19.2.18–23.2.18 share market prediction by Jayanta K. Aich

After a week marked by consolidation after sharp sell-off during the last week and announcement of a mega fraud involving more than Rs 11,000 crore in Punjab National Bank, which soured the sentiments for PSU Banks. Generally such mess comes out during bottoming cycle, which PSU banks are passing through. PSU Banks were the worst performer with fall of nearly 8.5 percent for the week. Worst seems to have been discounted in the PSU banks but positive triggers are awaited. RBI also at the start of week announced new NPA recognition norms, which will lead to more reporting of NPAs from the next quarter onwards. The combined net profit of 1395 companies which have declared their results for Q3FY18 were up by 10.6% (YoY), the combined net sales went up 14.6 % (YoY) which was the fastest growth in last 13 Quarters. Result season is now more or less over, in which companies have broadly performed better than expectations due to low base of earnings last year, the focus now would move to global market news flow.

Nifty has declined by 1.2 percent as compared to the previous week and mid/small caps indices also slipped by around 1 percent. Markets will see some time wise correction from current levels in the broader range of 10,300-10,700 levels over the next few weeks. After a period of high volatility the market is consolidating and adjusting to new reality. Oscillators have turned deep oversold and therefore are ripe for a bounce. Ideally a double bottom test should give courage to the market to rebound from oversold levels. In near term the market is expected to test the bottom from where a rebound is expected. Buy with stop loss should be adopted by the traders once the market tests bottom. The biggest worry for worldwide equities is the expectation of rising interest rates; Indian bonds are also falling in line with global clues. Stabilization of bond market is key to equity revival, otherwise bears will pounce stock market. Bull markets generally make a top when the numbers are great and bear market forms a bottom when the numbers are ugly. It is better to play safe and stick to only quality stocks.

Pharma, IT remained flattish with a negative bias of -0.5 percent. The positive side is Energy index which gained by 1.2 percent for the week. India VIX has declined by 15 percent to close near to 16 levels decreasing the volatility during the week.The positive sectors are Pharma, Consumer and Autos from current levels after the recent sell off while one should avoid Metals as the commodities are seeing a selloff in global markets.